Deed Transfer with a Trust
Recently we received a call about a deed transfer with a trust agreement. Specifically, the property is owned by a mom and dad as trustees of the Mom and Dad Revocable Trust. They would like for their daughter to be added to the title of the property.
When it comes to owning property, there are several types of ownership arrangements to consider. Here’s an overview of three common forms:
Tenancy by the Entirety
This form of ownership is exclusive to married couples and offers unique benefits. In tenancy by the entirety, both spouses jointly own the entire property. This means neither spouse can sell, transfer, or mortgage the property without the consent of the other. Additionally, if one spouse passes away, the ownership automatically transfers to the surviving spouse, bypassing probate.
Joint Tenancy
Joint tenancy is a common form of property ownership among multiple individuals. Each owner, referred to as a joint tenant, has an equal and undivided interest in the property. This means that if one joint tenant passes away, their share automatically transfers to the surviving joint tenants, rather than being passed on according to a will or trust. Joint tenancy also includes the right of survivorship, ensuring that the property ownership seamlessly transitions to the surviving owner(s).
Tenancy in Common
Tenancy in common is another form of co-ownership, often chosen by individuals who are not married or by business partners. Unlike joint tenancy, tenants in common can own unequal shares of the property, and each owner’s share can be passed on to their heirs through a will or trust. Additionally, tenants in common do not have the right of survivorship. If one owner passes away, their share of the property does not automatically transfer to the other owners but is instead distributed according to their estate plan.
Back to the issue of a deed transfer with a trust. When a property is owned by a trust, the trust owns the property. Therefore, the only ownership available when adding another party to the property is Tenancy in Common. The trust is an entity and dictates what happens to the property. Consequently, the portion of the property owned by the trust cannot pass to the daughter through survivorship. The best way to pass the property to the daughter is for the mom and dad to add that to the terms of the trust. However, if they want to add the daughter now and they want rights of survivorship, they will have to take the property out of the trust.
Before making any changes to the title of a property, you should speak with an attorney at Federal Title by either calling 202-918-9358 or emailing attorneys@federaltitle.com.